Report: It Will Cost a Million Bones To Be an iAd on iPhones

Apple is looking to charge advertisers one million dollars to get into the iAd door, according to a report from The Wall Street Journal, and to be among the very first advertisers in the service might cost more.

Apple has been holding meetings with advertisers to push the iAd network, which was unveiled at the company’s iPhone OS 4 media event, and is expected to launch as early as June. According to The Journal, ad execs have been crowding those meetings to learn more about Apple’s offering.

Despite the seemingly high price tag, several of these executives said that they were beginning to work in creative material for iAd campaigns.

“It was very easy to think about the several minutes of interaction time consumers can spend with the ad. It’s incredibly attractive,” Baba Shetty, chief media officer at Boston-based ad agency Hill Holiday, told the newspaper.

Under the plan being presented by Apple, the company would charge a penny for each ad-banner that appears in iPhone and iPad apps that integrate iAd. If a user then taps on the banner that opens up the interactive ads at the heart of the network, Apple would then charge $2. The million dollar price tag translates into a minimum buy for how many views and taps the advertiser is committing to buying in advance.

The article revealed another new aspect of iAd, too: Advertisers would also be able to target their ads according to the users’ iTunes download history, though likely in aggregate, as Apple is not likely to hand over user information to advertisers.

The example used is that advertisers could choose to only show their ads to users who have downloaded financial apps, listened to a particular kind of music, or watched a particular category of movie or TV show.

In addition, Apple plans on building iAd ads itself during the first few months of operation. The creative used in the ads would be developed by the outside ad agencies, but the actual coding would be done by Apple, which wants to make sure that the early ads work. Apple would eventually release an SDK for third party developers to use.

This is causing some pushback from some ad execs who don’t want to cede so much control to Apple.

“As a creative director, I can completely understand that they created this new baby and they want to make sure it gets born looking gorgeous. But as a creative director, I don’t feel completely comfortable letting Apple do the creative,” Lars Bastholm, chief digital creative officer at WPP’s Ogilvy, said.

“Advertisers would also be able to target their ads according to the users? iTunes download history,”

Oh great! I bought the soundtrack to Mama Mia for my wife and it is bad enough what Genius now recommends for me.

“In addition, Apple plans on building iAd ads itself during the first few months of operation. The creative used in the ads would be developed by the outside ad agencies, but the actual coding would be done by Apple, which wants to make sure that the early ads work. Apple would eventually release an SDK for third party developers to use.

This is causing some pushback from some ad execs who don?t want to cede so much control to Apple.”

This works out to $10CPM plus a $2CPC—or $10 per 1000 views of the ad, plus a $2 Cost Per Click.

$10CPM for mobile ads is just about right, and I think is low, given the rich media format. $2CPC is steep, compared to AdMob’s $0.15CPC, but again, the rich media format changes a lot.

What is most unusual for the pricing model is they are double-dipping, charging both CPM and CPC simultaneously.

The $1 million pre-pay? Face it, folks, that is to only bring the big players to the table. There needs to be some sort of filter, only because they (Apple/Quattro) simply would not be able to handle the rush to the platform.